RENK Group (AO) | Buy | RENK announces naval defence acquisition

Research evidence excerpt

RENK Group (AO) | Buy | RENK announces naval defence acquisition

RENK Group Buy | Target Price: EUR70.00

Company description Management

RENK is the global leader in mission-critical drivetrain components for the Dr. Alexander Sagel, CEO

defence and energy transition, providing systems to set vehicles, vessels, and Anja Mänz-Siebje, CFO

machinery in motion. Founded in 1873, it has c. 4,000 employees worldwide at Dr. Emmerich Schiller, COO

14 plants, including three MRO service sites. In 2025, it expects sales of at least Key shareholders

EUR1.3bn, of which 75% in defence end-markets, with the main focus on EMEA Free float 84.17%

(56%). RENK was fully owned by Triton private equity pre-IPO, which bought it KNDS 15.83%

from Volkswagen in early 2020. Management 4.18%

Investment case Valuation methodology

RENK, a global leader in military-grade propulsion, is strongly We value the stock with a DCF (terminal EBIT margin: 20%,

positioned to benefit from Europe’s defence rearmament, with a terminal sales growth: 2.0%, WACC: 8.1%) yielding an EUR70 TP.

dominant market share across NATO’s core MBT and IFV We estimate that the total incremental revenue opportunity

platforms. from the European rearmament effort is at least EUR5.5bn

The group’s recurring aftermarket exposure, long-cycle order through to 2035.

book, and modular production model enable strong earnings Risks to our rating

visibility and free cash flow generation, all without the need for Business and also RENK's customers depend on government

major capex expansion to deliver on incremental demand. spending.

With formal NATO country-level orders expected in 2026, Changes in the nature of warfare.

additional upside could stem from Germany’s Leopard 2 orders, Product defaults or call-backs.